Cloudy opportunities

13 June 2011 | Judy Reed Smith

The growing importance of cloud offerings across all levels of the industry

Carriers never sleep. The 24/7/365 model is a business base with technology migration and staying ahead of the adoption curve is keeping carrier managers awake at night. As TDM dollars give way to services yielding digital dimes, wholesale carriers search for fresh products with better margins, and jockey for growth opportunities in a market defined by shrinking revenues. Cloud services are current retail growth areas. At the MIT CIO Symposium this May, CIOs mulled over relevant issues. Movement to the cloud discussions centred on how and how much had moved, rather than if such movement would occur.

Stateside, strategies leading to new revenue opportunities frequently include partnerships with application providers, repurposing existing real estate, and, with increasing frequency this year, purchasing data centres and/or cloud services providers. Verizons January $1.4 billion purchase of Terremark opened server capacity in the US, Latin America and Europe. Verizon expects this market to grow 20% per year for the next five years.

Other companies predict even faster growth, and revenue expectations inspired Time Warner Cable to pick up Navisite just a few weeks later. By the end of April, incumbent local exchange carrier (ILEC) CenturyLink, having just closed its acquisition of RBOC Qwest, agreed to purchase Savvis for $2.5 billion, plus $0.7 billion in debt. Now, with a nationwide network and the storage and hosting platforms, the new company will pursue business services with a vengeance.

AT&T and Verizon already list various wholesale cloud services located worldwide. The global shared resources make great sense, as the capital invested in infrastructure can be leveraged more evenly over the normal carrier 24/7/365 timeframe. Even across the US and Canada, aside from extremely latency-dependent information, which city and which time zone chosen for the servers depends more on pricing than on proximity. And those costs will depend on cost of real estate, power, labour, local temperatures, etc, potentially offering business opportunities in new areas.

Reselling and channel partnerships also offer opportunities. The bottom line is there are more opportunities for security as a service, and infrastructure as a service and managed everything services for wholesale as well as retail players.